Spain’s economy could grow less than expected in 2022, central banker says
2022.05.18 13:41
FILE PHOTO: A woman walks past a Bank of Spain branch, during the coronavirus disease (COVID-19) outbreak, in the Andalusian capital of Seville, Spain, April 10, 2020. REUTERS/Marcelo del Pozo
By Jesús Aguado
MADRID (Reuters) -The Spanish economy could grow less than the recently forecast 4.5% this year as rising inflation hurts consumer confidence and international trade slows, Bank of Spain Governor Pablo Hernandez de Cos said on Wednesday.
In April, the central bank had already lowered its economic growth outlook for this year and next due to the impact of inflation stoked by Russia’s invasion of Ukraine and forecast inflation would soar to 7.5% in 2022.
Prices rose 8.3% year-on-year in April. [
“New information following the publication of these projections, including lower-than-expected GDP growth in the first quarter, would, in the absence of additional shocks, point to a further downward revision in the expected GDP growth rate for this year as a whole,” De Cos said.
Spain’s growth slowed sharply to a weaker-than-expected 0.3% in the first quarter from the previous quarter, leading the government to slash its growth outlook for this year to 4.3% from 7%. This week, the European Commission cut its growth outlook for the Spanish economy to 4% from 5.6%.
Still, De Cos said the possible new revision of the projections, subject to “extraordinarily high uncertainty”, would remain consistent with the path of gradual economic recovery.
Spain would not reach pre-pandemic GDP levels until the end of 2023, with inflation rates that would remain high in the coming months, before moderating thereafter, De Cos said.
“In coming months the Iberian mechanism to limit gas prices and lower electricity prices – recently approved in Spain and Portugal, in agreement with the European Commission – will foreseeably put downward pressure on energy prices in Spain,” he said.
